23 October 2005

Connie Mack Is Misinformed.

Connie Mack, the Republican Co-Chair of the President's Advisory Commission on Tax Reform is no intellectual giant and doesn't know the facts very well.

NY Times: [President Bush] is still calling for tax cuts. He would like to eliminate the estate tax permanently.

Mack: I think there is a likelihood that Congress will deal with that issue before this term comes to an end. I would vote to eliminate, as we refer to it, the death tax. I think it's an unfair tax.

NY Times: Really? I think it's a perfect tax. The idea behind it was to allow people to postpone paying taxes until they die, at which point they presumably no longer care. Why do you call it unfair?

Mack: Well, let's say, if you are in the farming business and you have the desire to pass this farm on to your children. The problem is that when your parents die, you have to come up with cash to pay the estate tax. One thing you don't have is cash. You've got plenty of land. So I just don't believe it's a fair tax.

NY Times: That strikes me as a red herring. The issue is not really small farms, but zillion-dollar estates made up of stocks and bonds.

With the current exemption level of $1.5 million, the CBO analysis found, only 300 farm estates in 2000 would have owed any tax at all -- and of those, just 27 would have a tax bill in excess of their liquid assets. At the even more generous exemption scheduled to take effect in 2009, $3.5 million, the ranks of those potentially hit hard by the tax would have dwindled even further; 65 farm estates would owe taxes and 13 would not have enough cash to cover the bill.

There are more than two million farms in the United States. The estate tax is far less of a threat to those farms than, for example, the Medicaid estate recovery system, which puts liens on far more homesteads and farms of regular people than the estate tax ever did, even at its worst, while generating far less revenue. But, for people like Mack, the less affluent, even among their base of farmers, don't matter.